Tax allowance for expats
To most businesses and employees the 30%-ruling does not need an introduction. Optimising tax obligations and thus reducing the amount of wage tax payments is a priority to most of our clients.
The 30%-ruling is a tax benefit, primarily intended to cover the costs expats make when moving to the Netherlands due to employment. Instead of keeping a record of tax free allowances to the employee, the employer is able to pay the employee 30% of the gross salary untaxed, regardless whether the costs are in fact made. The ruling not only fulfils the need of less administration, but it has become an important fringe benefit to employees as well. Employer and employee could however also agree that the financial advantage of the ruling is forwarded to the employer.
There must be an employment relation to be able to make a successful application for the ruling, since it’s applicable on wage taxes only. Besides that, an employee must be recruited from abroad to be considered an extra-territorial worker. Further, the ruling only applies to either employees assigned to the Netherlands in an intra-company transfer, or to employees with a specific skill that is considered scarce. Practically, highly skilled migrants and other employees with a work permit fulfil the required of having specific expertise.
If you are unsure whether the ruling would be granted to you, a consultation with our experts is highly advisable. Changing employers does not necessarily influence ones eligibility for the ruling. A new application must be made though. In total, the ruling can be applied for eight years at maximum.